University of Strathclyde Graduate School of Business

MASTER OF BUSINESS ADMINISTRATION

OPERATIONS MANAGEMENT

SAMPLE PAPER
Restricted Open book exam

Attempt ALL Questions in Section A and ONE Question from Section B

Section A

1. A Service company has decided to maintain its range of services that it offers the
public and at the same time invest in IT so that costs can be reduced. Indicate
which direction this company is moving within Schmenner’s Service-Process
Matrix.
(5)

2. Pressure for productivity increases in the service sector is rising. Outline briefly
with a few key points, what you think might be the implications for the cost of
service products, variety of services available and the quality of service products.
(5)

3. A company has been classified as a service shop. Assuming that you have never
visited this organisation, what characteristics has the classification revealed?
Include the description of a typical organisation of this type in order to enhance
your answer.
(5)

4. Goldratt, in explaining his Theory of Constraints, suggests that the sum of the
optimals is not the optimal of the sum. Explain how he suggests that we might
take advantage of this situation.
(5)

5. The annual demand for a product is 110,000 units. The order cost is $3,000 for a
single order. The cost of the item is $120 and the holding cost has been
calculated at 25% of the cost of the item to carry it in stock for one year. What
quantity would you advise they order?
(5)

6. A well-designed conversion process operates as closed loop system. Explain

what a closed loop system is and why it is used. Give some examples from you
own experience to illustrate your answer.
(5)

Continued/….

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7. What do you consider to be the major challenges facing Operations Managers in
the 21st century? Illustrate your answer with examples from your experience.
(5)

8. Explain what is meant by the term concurrent engineering. Include the rational of
why it is better than traditional approaches to product development. Examples
from your experience can be used to support your answer.

(5)

9. Draw a diagram illustrating the conversion process that is present in a good

quality restaurant. The diagram should include inputs, conversion activities,
methods of feedback and outputs (products).
(5)

10. In the study of job design we encountered the term Division of Labour. Briefly
discuss the advantages of creating a process that includes highly divided jobs.
Illustrate your answer with examples from your experience.
(5)

Continued/….

2
 Section B
(Attempt only one Case Study)

Case Study 1: McPatna’s Indian Cuisine (Reference Appendix 1)

Overview of the case:

McPatna’s is a family owned business that produces excellent Indian food products.
The company offers a wide range of products and serves a numbers of different
markets. The business is currently expanding rapidly while at the same time they are
experiencing increasing complexity in the variety of products offered to the market
and the internal food processes managed internally. Also, handling customer orders
and invoicing is becoming too great a management challenge for the three family
members who currently run the business. Assume that the family has engaged you
as an independent operations consultant to give them personal advice. Although
beyond the advice you might offer the family also intends to employ a professional
manger to help the company expand and take advantage of the business
opportunities being offered.

Read the full case study in Appendix 1 and then answer the following questions:

1.(a) How would you help the family develop an operations strategy?
(10)

1.(b) How would you suggest they identify (categorise) the individual businesses
and align suitable processes and KPI’s
(20)

1.(c) How would you advise they cope with the trade-offs that may be inherent in
their business?
(20)

Continued/….

3
Case Study 2: Unique Autos (Reference Appendix 2)

Overview of the case:

You are a management consultant employed by Steve Mullen, the Managing Director
of Unique Auto’s, to help the company restructure its operations. He has asked what
operational advice you would give to help implement his strategic vision and ensure a
successful ongoing operation.

Read the full case study in Appendix 2 and then answer the following questions:

2.(a) Describe the operational problems that you see facing the company.
(20)

2.(b) Outline the solutions you would implement explaining how these will lead to
greater efficiency.
(30)

Continued/….

4
Appendix 1 - Case Study – McPatna’s Indian Cuisine

The amount of Indian food eaten in Britain is considerable. In 2006, there are around
10,000 restaurants serving more than two million meals every week. The industry is
worth more than £2.5 billion a year.

Established in Scotland in 1989, McPatna’s has grown to become a successful

brand. With award-winning cooking sauces, curry pastes, chutneys, pickles and
pappadums distributed to more than 14 countries worldwide, including the UK,
Europe, Japan, Australia, New Zealand, the United States and Canada. The
company has 6 local restaurants and produces pre-prepared chilled curries from
supermarkets. Recently an initiative is being considered to introduce fish and chips
and curry both as fast food restaurants and delivery vans.

McPatna’s, is a family owned business that has grown considerably since its
inception. The current annual growth rate in sales value is over 50%. With over 150
people working for the company in a single factory site, the company is considering
expansion but unsure of which aspect of their business should be expanded first. The
business is run on a day to day basis by three family members. Two older ladies and
a younger son. All related to the retired owner. The younger son Raju, a qualified
accountant manages the financial aspects of the business and the older ladies (both
in their late sixties) manage everything else from ordering supplies to shipping
orders. Recently, all of the family members have agreed that there is too much work
for them and additional expertise should be sought probably by employing a
professional manager.

Orders vary from overseas orders for items that are not perishable such as
chutney’s, pickles and pastes to daily meals prepared for consumption within 1 week
of issue and pre-cooked meals that are supplied to orders received from a national
supermarket chain. The orders for pre cooked meals in particular are experiencing en
explosion in variety.

The company is beginning to experience trade-offs between the range of products

and services provided and their ability to meet demand. Quality has begun to suffer.
Once the name McPatna was synonymous with the best Indian cuisine, a recent
customer survey only rated them number two in terms of quality. In conversations
with the bank they have been informed that they should not try to expand the
business as a whole but having have been requested to analyse their business and
provide an plan expansion based on phases with financial targets set as gates before
the next phase can be started.

The company is beginning to experience shortages of chefs with sufficient

knowledge, made worse due to a shortage of suitable courses in local colleges.
Although the Academy of Asian Culinary Arts at Thames Valley University took their
first students in 1999. Currently there are over 20,000 vacancies to fill, and
competition between restaurants for the best chefs is intense.

Continued/….

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Other problems seem to be managing staff and sharing staff among a number of
competing processes. Recently orders were lost because delivery service was very
poor and there have been issues raised by an environmental officer of the
cleanliness of the freezer facilities.

The family have decided firstly to appoint an operations consultant who will advise
then on how to develop an operations strategy and help them focus resources
among the competing and diverse products and markets.

The consultant has also been asked to help develop a business plan and a logical
step by step guide as to how they should reorganise their facilities, improve services
and deliver quality image.

Continued/….

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Appendix 2: Unique Autos

Unique Autos Ltd designs and manufactures niche-market sports cars. Originally a
family-run business the company has enjoyed some success and recently went
public. To this point, success has been built on robust design and quality construction
of specialized motor cars for the top-end market. The company’s main product the
‘Sceptre Sport’ has become increasingly popular and the production facility -
originally set-up for low-volume custom build - is unable to cope with growing
demand. In addition Prestige Autos, a larger manufacturer of quality cars,
recognizing the sales potential, has offered to market and sell the Sceptre through its
network of showrooms. Due to these factors the MD of Unique, Steve Mullen, has
decided that the time has come to alter the scale of the operation seeing the alliance
with Prestige as a way to gain the marketing and selling capability that Unique lack.
The operational challenge now facing Steve is to transform Unique from a low-
volume to a high-volume manufacturer of the Sceptre Product. The company has
sufficient capital to spend on this restructuring due to money raised during the
flotation.

Finance & Contract

Unique have a healthy profit margin on the Sceptre currently however Prestige will
take a fixed fee from each sale so reducing profit for Unique. Due to the fixed nature
of the Prestige fee any cost savings from increased manufacturing efficiency are kept
by Unique. The key to the success of the volume selling strategy is therefore to
produce the cars at as low a cost as possible taking best advantage of economies of
scale.

The Manufacturing Site

The Assembly Building is in good shape structurally and the utility provision is also
good however there is no room for expansion and Unique are reluctant to relocate
due to their dependence on skilled local labor.

The IT Infrastructure is poor with capability limited to some discrete packages that
support some elements of the production process. These IT packages are generally
underused as they are outdated, not user friendly and were never integrated properly
with the process.

The Current Production Process

The site is well equipped with up to date machinery and tooling for metalwork and
manufacturing of structural components and body work including a state of the art
automobile painting facility. This means manufacture of the car structure and body
work is relatively efficient.

Most of the other manufacturing operations are also carried out on site using a suite
of dated general purpose machines where the skill of the operator is the factor that
determines the outcome of the job.

Continued/….

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Engines are assembled in house from bought-in components. This is a labor
intensive task that is poorly supported by tooling and machines. In addition the
number of components required to make an engine is large and there are often
delays due to the lateness of components. Engine build is not seen as the core
competence of Unique and it has been suggested previously that this should be
subcontracted to a specialist assembler.

Manufacture of all synthetics (e.g. plastic parts) is done in-house, usually by hand or
by general purpose machine. It is recognized that this is extremely inefficient as a
specialist manufacturer with the latest synthetic molding machinery could do this at a
vastly reduced cost.

All internal upholstery is carried out on site by skilled fabricators however workers
with this skill-set are hard to come by and shortage of labor in this area frequently
leads to production delays.

Material control in general is poor with only basic IT support. A large department of
material controllers are required to keep the production line supplied with materials.
Material shortages are frequently quoted as reasons for delay.

The production engineering department is small and the manufacturing processes

are poorly structured. There are some jobs in the factory that are only familiar to a
small number of workers and there are frequent instances, usually around holiday
times, when production has stopped due the unavailability of a key worker.

Workforce
All of the workforce in the manufacturing unit are skilled with the majority expert at
metalworking, assembly work and painting. They are very well paid by industry
standards and the wage burden is a constant source of irritation for the company
Financial Controller. These skilled workers carry out all the tasks within the
production process leading to a large proportion of a skilled-man’s time being taken
up doing what can be considered unskilled jobs. The factory is not unionized.

Management Structure
An operations manager is responsible for the production process supported by
supervisors that are in charge of a specific part of the production line. The workforce
are not organized in teams and wait for the supervisors to allocate tasks on a daily
basis. However due to the lack of process planning the supervisor often is unaware
of the detail of certain tasks and some are forgotten. In addition the workers
frequently work slowly to make life easy for themselves.

End of Paper